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Will TSL’s 50 day moving average hold?

April 10th, 2008 · 2 Comments

There is another 50 day moving average in play, Trina Solar (TSL) is also very close, but now on the way down. The first test was successful, as we expected a few days ago, and unless we have a really tanking market, this one should also be so. We are actually very bullish on Trina

So we expect another trading opportunity coming up, but don’t go overboard, we really don’t trust the overall markets. We’re actually somewhat surprised at how bad this stock has performed this year. That’s why, apart from providing excellent trading opportunities, we also see it as a long-term buy, certainly at these levels.

When the news of the credit crunch got serious enough to start worry the market in ernest, the solar sector sold of emphatically, many names were cut in half and more. For Trina, that was really unfortunate, as it was one of the cheapest solars to start, and then produced really killer quarterly figures.

So Trina, unlike some other names, was hardly overvalued, nevertheless, it was sold off with the other solars that were. How the sector behaved was somewhat odd though. All those worries about recession could only hit the solar sector in one way, through a falling oil price, making solar energy more expensive on a relative basis.

But instead of going down, oil prices kept rising. And since many solars have already sold most of their output for this year, and the US is not a terribly important market for most of them anyway (Trina hardly sells in the US, although that’s going to gradually change this year), one could argue that here was a sector that was recession proof.

Yet it was one of the most sold off sectors in the markets. We can think of two reasons. First, many solars were very expensive, so a correction was always due. Secondly, money moved out of the more speculative part of the market.

Since many solars have come down a lot in value, and the sector still grows at 50% or so on average, we expect them to do really well. Trina is our favorite pick, it’s both cheaper than most, and growing faster.

Tags: TSL

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